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5 Top Lessons From LAWTrust To Prepare For Super-Charged Growth

Christi and Maeson Maherry took their R103 million business to a turnover of R198 million in just 15 months. How? With a strong vision, the right foundations in place.

Nadine Todd

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Christi Maherry and Maeson Maherry

Vital Stats

  • Players: Christi Maherry and Maeson Maherry
  • Company: LAWTrust
  • Est: 2006
  • Turnover: R198 million
  • What they do: Digital information security solutions
  • Team: 90 people, 28 of whom are developers and security engineers
  • Visit: www.lawtrust.co.za

When Christi and Maeson Maherry launched LAWTrust in 2006, they had a grand vision: They wanted every person in South Africa to have a digital ID. With the launch of the national ID card in 2013, they achieved that vision.

But here’s the thing about a grand vision. First, no goal can be achieved without laying specific foundations and building blocks. When the tender was awarded to LAWTrust by the Department of Home Affairs, they had just six weeks to implement. Christi and Maeson’s international product partners said it couldn’t be done — that no national project of that scale had ever been completed in six weeks.

“The rollout was scheduled for Nelson Mandela Day, and we couldn’t miss our deadline. We had to deliver,” says Christi. “If we had won the tender when we launched in 2006 we wouldn’t have been able to meet the deadline,” adds Maeson.

“But we had spent seven years working on our core competencies, systems, processes and products. It was still a massive project, but we’d built up the internal competencies to pull it off. You have to systematically prepare for growth.”

Second, successful companies are built because they get into the market and they start trading. Elon Musk’s ultimate goals are to build solar roofs that seamlessly integrate battery storage; to expand his electric vehicle product line to address all major segments; and to develop a self-driving solution that is ten times safer than manually operating vehicles.

Related: AutoTrader South Africa’s George Mienie Knows Disruptive Innovation Is More Than Shifting Gears

To get there, he’s built the Tesla: A low-volume, expensive and exclusive car. That product range is funding a medium volume car at a lower price, which in turn will fund an affordable, high volume car — which will fund his ultimate goals.

The point is that you need to be in the market. You need to build solutions that customers will pay for and that bring in revenue, but also allow your business to grow and develop.

For LAWTrust, those solutions were built for the banking sector. When the opportunity to tender for the national ID card project came up, it was the culmination of Christi and Maeson’s vision — but under no circumstances could it be achieved at the expense of their existing client base.

And finally, what happens once the grand vision is achieved? Truly innovative companies that achieve market longevity are able to look beyond their own goals to the next ground-breaking vision. You need to simultaneously live in the future and in the here and now.

Here are the top five lessons Christi and Maeson have learnt while building their business.

1Develop principles you believe in

LAWTrust

LAWTrust was launched because Christi and Maeson wanted to focus on cyber-security within the digital space, as well as digital identities and authentications.

They were both working in the crypto space, but wanted to create something of their own, and so they found a partner who would bankroll the business in exchange for a solution that allowed for the authentication and protection of digital contracts in the legal sector.

Unfortunately, the solution ultimately needed local laws to change, a factor they hadn’t considered and which was taking much longer than expected. But it gave the business a platform from which they could build encryption solutions for other sectors, most notably the banking sector.

In a nutshell, LAWTrust authenticates ‘safe’ websites, and provides user protection once you are in those websites, so that your details cannot be accessed by anyone else. These solutions work for Internet sites as well as Intranet sites, and have been extended to create personal, life-long digital IDs through the new national ID cards.

But the success of these solutions has stemmed from a set of core principles, rather than specific tech solutions.

“You need to develop a set of principles that you believe in, and then find a way to deliver solutions based around those principles,” says Christi.

“For us, identity is the key to security. How you prove identity may change, but the principle is sound, and that’s been imperative to how we develop solutions.

Related: 7 Lessons Elevator Learnt When Partnering With Their Competitor For Next Level Growth

“We’ve always believed in PKI — public key infrastructure — which is a set of roles, policies and procedures that create, manage, distribute, store and revoke digital certificates and manage public-key encryptions. Ten years ago, Gartner said PKI was dead. We disagreed. Not because we were married to one set of tech or solution, but because we held to our core principles, and believed that PKI was the best way to deliver on those principles. We spent a lot of time convincing our clients of this fact, until Gartner ultimately retracted their statement.

“We agree that you can’t be married to your solution. The next interesting tech is blockchain. If we ignore this, we may no longer be the niche experts in this field in the future. But we also really believe that the principle comes first — the method of delivering the solution based on that principle is secondary.”

For Maeson, this isn’t just true of technology companies, but all businesses across sectors and industries. “In the late 1800s and early 1900s the primary mode of transport was wagons. A company whose name and products only focused on wagons was left behind once the automobile was invented. A company whose name and products focused on transport solutions, however, could move with the times. It’s all about how you view your business and your product. Are you in the business of producing horse harnesses, or are you in the business of helping people get from point A to point B? Your view will determine the company’s focus, and how agile you are.

“This has been the cornerstone of how we view our place in the market. We provide digital identities that protect personal and company information. How we do that might change over time, but the principle remains the same.”

2Be courageous in everything you do

lawtrust-owner

Christi is no stranger to courage. In fact, her personal motto is that you should invest everything you have in the journey. “No guts, no glory,” she laughs.

“I was the first female in South Africa to complete the VIP protection course for the National Security Agency, and it was because I wouldn’t take no for an answer. I got to serve the President. I was on his protection detail. I met Barbara Bush in the White House, and was assigned Prince Philip’s protection detail when he visited South Africa. You need to know what you want and go for it — and the beauty of it all is that courage is a habit that you can build and repeat.”

It might be Christi’s personal mantra, but it’s the cornerstone of the business she and Maeson have built together as well. “If your executive judgement is sound, then you have a solid business,” says Maeson, whose background is in electronic engineering.

“Business is all about accepting certain levels of risk. If you’re focused on growth, you spend most of your time in unchartered territory. This often means taking on big tasks and figuring them out along the way.”

While Maeson is naturally more cautious than Christi, the partnership works well. Christi’s focus is on the future, and she’s always ready and willing to blaze ahead, while Maeson requires data to plot their course and growth plans. Together, they balance out, and with an agreement in place that courage is a necessity, and that risk is inherent in business, they walk the line between focusing on big, hairy, audacious goals (BHAGs) and putting the necessary systems and processes in place that will get them there.

“If we didn’t have this mentality we would never have pitched for the national ID card project,” says Maeson. “But without Maeson’s systems — and his entire team’s willingness to work 20-hour days for six weeks straight, we wouldn’t have delivered,” adds Christi.

Being courageous goes beyond just taking business risks though. It’s also about having courageous conversations with your employees and customers.

“Some of the most intimate customer relationships we’ve built have started with a problem, which we gave 110% to fix. This is the foundation for a fantastic relationship — but not if you aren’t honest,” says Christi.

Related: 10 Lessons From Andrew Brand On Shaping Organisational Success

“Always be honest; don’t say that you have a solution when you don’t. Rather tell clients that the issue is tougher than you assumed and you need another week to find the solution. There’s a temptation not to communicate with customers while you fix a problem, but we’ve learnt that there’s no such thing as over-communication. People feel secure when they have all the facts. It’s not always easy to be this transparent, but it’s essential to successful relationships built on trust.”

3Owning your niche creates defensibility

south-african-entrepreneurs

One of the key areas investors evaluate businesses on is defensibility: How difficult is it for competitors to come into your market and encroach on your market share?

Maeson and Christi have concentrated on three key factors to ensure defensibility in their market. The first is that although they stick to a niche within PKI and crypto solutions, they work across multiple industries and sectors.

“We follow a strategy of never playing in only one sector,” says Maeson. “We have a base of solutions that we tweak according to industry-specific needs. This means that we aren’t reliant on the success or growth of any one sector.”

This strategy was developed on the back of LAWTrust’s first big failure, which was developing a product for their first clients and investment partners that could not be implemented because the law lagged behind the solution.

“On spreadsheets, the business model looked great,” says Maeson. “What we didn’t take into account was that the business plan involved changing the law, and you can’t put a timeline on that.”

Christi and Maeson didn’t let this early failure deter them. “We are security specialists and we knew that our vision was rock solid,” says Christi. “The first product didn’t work, but it gave us the building blocks for three other products. We were trying to solve the fact that legal contracts have to be sent via registered mail. We created an encrypted mail solution, which established building blocks for a number of other solutions. The product didn’t work, but it created a great start for the company.”

Both Christi and Maeson considered themselves to be PKI visionaries, and so they unbundled the first product, and repackaged it into three different solutions that were not industry-specific.

“We convinced our shareholders to continue this journey with us, and we made the decision to create solutions that worked across sectors and industries going forward,” says Christie.

Two years later, in 2008, LAWTrust signed its first banking client. “Specialists can go up against giants,” says Maeson. “We knew we didn’t want to be small generalists. This isn’t a defensible business model but being very specific niche experts is a different ball game. We can’t be commoditised by larger companies, and we aren’t really competing with them. Instead, we’re the OEM experts that large integrators use when they’re delivering on a project.”

Maeson and Christi both believe that specialising in an area offers protection. “We have 90 people working for us who are all crypto experts,” says Christi. “Someone who is passionate about this field will come and work for us, because it makes up 100% of their job instead of 10% or 20% at a large IT firm. This means we have the best in the field working for us, and we’re completely focused, putting us at the top of our game.”

Related: How An Accidental Entrepreneur Founded A R175 Million Business

LAWTrust’s core focus is on customer success, which requires exceptional customer service. “Everyone says customer service is their key differentiator, but for us it’s a non-negotiable if you’re building a defensible position,” says Christi.

“Substantial deals have come from answering the phone at 10pm on a Friday night to help a client out of a jam. We know that if banks or the Department of Home Affairs aren’t delivering, it’s our fault. Protecting them is our number one priority. I would rather be disturbed at 2am than hear the next morning on 702 about long queues outside Home Affairs.”

This focus on customer success shines a light on your sector, which in turn attracts competitors to your space. Christi and Maeson understand that this is the cost of doing business, and that it makes creating a defensible position an ongoing process, rather than a once-off.

“The best defensibility is to know what you’re doing and to enjoy doing it,” says Christi. “If you’re passionate about what you do, you’ll naturally put in 120%. You’ll shine and attract the best people. This will in turn drive you to deliver exceptional service, which will give you a strong track record. We have incredibly strong references. Any new players to the market will find it difficult to compete with the level of delivery we’ve achieved.”

4Lay the foundations for growth

christi-lawtrust

It’s never too early to start laying the foundations of growth. “When the opportunity for a large contract comes along, and you put yourself and the business out there, you need to have scaled the business already,” explains Maeson.

“To even win the deal in the first place you need to prove you can implement and support your idea. We’ve learnt that ‘overnight’ successes are actually ten years in the making. They take a vision, and a roadmap of how you’re going to get there.”

This is true of everything LAWTrust has done since its launch, but can be seen in action in the national ID project. “The ID card tender was ten years in the works,” says Christi.

“It came up a few times without successful contenders securing the project. Then the last time it came up there was a digital component. We had spent a few years in the market, had developed a reputation for delivery, and we had the product. The timing was right for both of us — we had a solution that matched their need, and we were confident we could deliver in the extremely tight timeframe.”

Christi and Maeson had a grand vision — but on the ground is where you make grand visions work. “The heavens don’t magically open after 18 months in business,” says Maeson. “We knew where we wanted to go, and we had to figure out the best path to get there. We needed to do the time. Our entire business is based on trust, integrity and security. There are no short cuts to this. We needed to develop the right products and build a reputation, and that takes time in the market, and an unwavering focus on delivery.”

Maeson has focused on developing two different sets of products: Commodity products that are cash generative, because they offer annuity (subscription) income, and can be housed in the cloud or on client premises. These solutions are developed with international partners; for example, LAWTrust is the Entrust partner in Africa, and has Adobe and Microsoft international accreditations.

Maintaining these requires annual three-month audits from KPMG, and solutions are built onto international products to integrate into existing systems. On the whole, they are subscription based, which frees the team up to develop specialist solutions, like the national ID project.

“These have a much longer sales cycle, and so we need the mix of both commodity and specialist projects to make our business model work,” says Maeson.

These solutions can be deployed anywhere in the world, and this has opened an additional revenue stream for LAWTrust in international markets. Moving into international markets also hedges currency risks.

“Every company around the world has a digital strategy. We can provide the trust that clients need to feel comfortable sharing their information online for any business, anywhere in the world,” says Christi.

Interestingly, sometimes part of the growth journey is to not grow. This happened to LAWTrust after the implementation of the national ID Project.

“The project took six weeks to implement, and during that time we communicated regularly with our banking clients. It was a huge project that required an enormous amount of our team’s focus, and we needed to ensure that they didn’t feel abandoned by us,” says Christi.

LAWTrust’s clients understood their constraints, and because the solutions they employ are subscription-based, managed PKI solutions, they continue operating without LAWTrusts’s express focus.

This is one of the challenges of growth. You need to have scaled to be able to handle a project of this magnitude, but you can’t double your team overnight. You need to deliver with what you have. Many companies fall short when they’re trying to scale because they either over-spend in preparation for a large project, or they can’t invest in the growth needed to deliver the project.

In LAWTrust’s case, Maeson’s team worked day and night to deliver, with the understanding that it was short-term only. Thereafter, the business knuckled down and focused on ensuring all the systems, processes and teams were in place to handle the new contracts.

It’s for this reason that there was almost no revenue growth between 2013 and 2015, but the business then doubled its turnover in 2016, taking it from R103 million to R198 million in 15 months.

“Revenue growth is good — it’s the focus of all high-impact, growing businesses,” says Maeson. “But it cannot be the be-all and end-all of what you’re doing. We needed to consolidate the business and ensure our foundations were ready for the next level of our growth before we embarked on it. Once we had everything running seamlessly we could start focusing on growth again — with a large focus on international markets.”

5Never stop learning

Christi and Maeson

Christi and Maeson have a strong belief that great businesses are built when you attract — and retain — the right people. There’s a strong leadership component in talent management however, not just from the perspective of managing your teams, but in having the ability to step back and give your upper management the freedom to make decisions and take ownership of their roles.

“When you give people the opportunity to do their thing, you’ll build a better business — provided you have the right people on board,” says Maeson.

Interestingly, this ties in with the two founding partners’ focus on self-development as well. “We’re continuous learners,” says Christi. “

You can’t step away to focus on your personal growth and business acumen if you’re always working in the business, and without that growth you can’t adequately work on the business. To do both, you need to trust your team to continue with the day-to-day operations.”

Christi and Maeson have both taken numerous executive courses. Christi started with the Management Advancement Programme (MAP) at Wits Business School, which ignited her renewed love of learning.

“I realised the value that ongoing learning adds to my business and myself,” she says.

This was followed by programmes at EY and even Stanford. Maeson is completing his PhD, and has also completed online courses through Stanford. They also regularly attend international conferences in their sector.

“Our aim is to globalise, and to do that we need a broader view of international markets and challenges, as well as a global network. These courses help us achieve that goal and set up new channels, and give us insights into different cultures and drivers,” says Christi. “They also help you leapfrog your organisation,” adds Maeson.

“Why make the same mistakes that other businesses make when you can learn from them? Business theories and case studies have been invaluable in our growth and understanding of our business. We’ve laid the foundations for global growth because we’ve focused on getting all the right elements in place — and that includes ourselves and our own knowledge base.”

Lessons Learnt

Courage is a habit. Get into the habit of holding courageous conversations with staff and customers.

Business is about accepting certain levels of risk. If you’re focused on growth, you spend most of your time in unchartered territory. Take big bites and then focus on figuring it out.

Fail fast. This is crucial. Business and technology are changing all the time and you need to change with them. You’ll make mistakes — that’s okay. Just make them quickly so that you can learn and move forward.

Believe in principles, not a solution. Solutions — and how they’re deployed — change. Make sure you have a set of principles at your core; how you package those solutions shouldn’t be at the centre of your business.

Focus on operating costs first. We’ve done this with our annuity income streams, which has enabled us to focus on specialist projects.

To scale, scale people. This is where the real growth happens — with your people and what they can deliver. Be transparent with them, support them, help them to grow and develop. Great teams build incredible businesses.

Have foundations and sub-strategies. For us, the foundation is to remain a niche and specialist provider. However, we have very specific growth plans that require sub-strategies. These are to diversify our product offering, build our people, and balance our currency earnings. We’re cost-effective and highly skilled, which is a good combination for international growth.

Build partnerships based on trust. This is essential across the business, from client partnerships, to teams, to the founding partnership. We are very different people with specific skill sets, and we approach ideas from different perspectives. It’s important that we trust that our goals are the same, and we’re arguing about the best way to get there. Ultimately, we know that each argument is in the best interests of the business, and that’s the result of trust.

Building a high-growth organisation takes time. So put in the time. Don’t expect instant traction. The best businesses are built on solid reputations and referrals, and those take time to develop.

Always be honest. Be honest with your staff and your customers. Don’t take the easy road and be quiet when you’re solving a problem. Rather let everyone know where you — and they — stand.


Key Insights

Sometimes you need to go slow if you want to grow    

From 2006 to 2015 Christi and Maeson Maherry built a R103 million business. They then almost doubled their turnover to R198 million in 15 months. This was because they focused on building solid foundations, and then integrating new client projects and employing the teams needed to run those projects, before focusing on next-level growth.

The best defence is a good offense          

There will always be competitors entering your market. The best way to ensure a defensible position is to always be looking ahead, maintaining an innovative mindset, and securing a niche position within your field. No matter what, you want to be the subject matter expert in your field.

Principles come first, solutions second   

How you deliver a solution changes with the times. Technology changes, and you don’t want to be left behind when it does. What is your core? What do you do? This is step one. How you deploy your solution is step two.

Nadine Todd is the Managing Editor of Entrepreneur Magazine, the How-To guide for growing businesses. Find her on Google+.

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Entrepreneur Profiles

Expert Advice From Property Point On Taking Your Start-Up To The Next Level

Through Property Point, Shawn Theunissen and Desigan Chetty have worked with more than 170 businesses to help them scale. Here’s what your start-up should be focusing on, based on what they’ve learnt.

Nadine Todd

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Vital Stats

  • Players: Shawn Theunissen and Desigan Chetty
  • Company: Property Point
  • What they do: Property Point is an enterprise development initiative created by Growthpoint Properties, and is dedicated to unlocking opportunities for SMEs operating in South Africa’s property sector.
  • Launched: 2008
  • Visit: propertypoint.org.za

Through Property Point, Shawn Theunissen and his team have spent ten years learning what makes entrepreneurs tick and what small business owners need to implement to become medium and large business owners. In that time, over 170 businesses have moved through the programme.

While Property Point is an enterprise development (ED) initiative, the lessons are universal. If you want to take your start-up to the next level, this is a good place to start.

Risk, reputation and relationships

“We believe that everything in business comes down to the 3Rs: Risk, Reputation and Relationships. If you understand these three factors and how they influence your business and its growth, your chances of success will increase exponentially,” says Shawn Theunissen, Executive Corporate Social Responsibility at Growthpoint Properties and founder of Property Point.

So, how do the 3Rs work, and what should business owners be doing based on them?

Risk: We can all agree that there will always be risks in business. It’s how you approach and mitigate those risks that counts, which means you first need to recognise and accept them.

“We always straddle the line between hardcore business fundamentals and the relational elements and people components of doing business,” says Shawn. “For example, one of the risks that everyone faces in South Africa is that we all make decisions based on unconscious biases. As a business owner, we need to recognise how this affects potential customers, employees, stakeholders and even ourselves as entrepreneurs.”

Reputation: Because Property Point is an ED initiative, its 170 alumni are black business owners, and so this is an area of bias that they focus on, but the rule holds true for all biases. “In the context of South Africa, small black businesses are seen as higher risk. To overcome this, black-owned businesses should focus on the reputational component of their companies. What’s the track record of the business?”

A business owner who approaches deals in this way can focus on building the value proposition of the business, outlining the capacity and capabilities of the business and its core team to deliver how the business is run, and specific service offerings.

“From a business development perspective, if you can provide a good track record, it diminishes the customer’s unconscious bias,” says Shawn. “Now the entrepreneur isn’t just being judged through one lens, but rather based on what they have done and delivered.”

Related: Property Point Creates R1bn In Procurement Opportunities For Small Businesses

Relationship: “We believe that fundamentally people do business with people,” says Shawn. “There needs to be culture match and fluency in terms of relations to make the job easier. As a general rule, the ease of doing business increases if there is a culture match.”

This relates to understanding what your client needs, how they want to do business, their user experience and customer experience. “We like to call it sharpening the pencil,” says Desigan Chetty, Property Point’s Head of Operations.

“In terms of value proposition, does your service offering focus on solving the client’s needs? Is there a culture match between you and your client? And if you realise there isn’t, can you walk away, or do you continue to focus time and energy on the wrong type of service offering to the wrong client? This isn’t learnt over- night. It takes time and small but constant adjustments to the direction you’re taking.”

In fact, Desigan advises walking away from the wrong business so that you can focus on your core competencies. “If you reach a space where you work well with a client and you’ve stuck to your core competencies, business is just going to be easier. It becomes easier for you to deliver. Sometimes entrepreneurs stretch themselves to try to provide a service to a client that’s not serving either of their needs. This strategy will never lead to growth — at least not sustainable growth.”

Instead, Desigan recommends choosing an entry point through a specific offering based on an explicit need. “Too often we see entrepreneurs whose offerings are so broad that they don’t focus,” he says. “Instead, understand what your client’s need is and address that need, even if it means that it’s only one out of your five offerings. Your likelihood of success if you go where the need is, is much higher.

“Once you get in, prove yourself through service delivery. It’s a lot easier to on-sell and cross sell once you have a foot in the door. You’re now building a relationship, learning the internal culture, how things work, what processes are followed and so on — the client’s landscape is easier to navigate. The challenge is to get in. Once you’re in, you can entrench yourself.”

Desigan and Shawn agree that this is one of the reasons why suppliers to large corporates become so entrenched. “Once you’re in, you can capitalise from other needs that may have emanated from your entry point and unlock opportunities,” says Shawn.

Building a sustainable start-up

While all start-ups are different, there are challenges most entrepreneurs share and key areas they should focus on.

Shawn and Desigan share the top five areas you should focus on.

1. Align and partner with the right people

This includes your staff, stakeholders, partners, suppliers and clients. Partnerships are the best thing to take you forward. The key is to collaborate and partner with the right people based on an alignment of objectives and culture. It’s when you don’t tick all the boxes that things don’t work out.

2. Make sure you get the basics right

Never neglect business fundamentals. Do you have the processes and systems in place to scale the business?

3. Understand your value proposition

Are you on a journey with your clients? Is your value proposition aligned to the need you’re trying to solve for your clients? Are you looking ahead of the curve — what’s the problem, what are your clients saying and are you being proactive in leveraging that relationship?

Related: Want To Start A Property Business That Buys Property And Rents It Out?

4. Unpack your value chain

If you want to diversify, understand your value chain. What is it, where are the opportunities both horizontally and vertically within your client base, and what other solutions can you offer based on your areas of expertise?

8. Don’t ignore technology

Be aware of what’s happening in the tech space and where you can use it to enable your business. Tech impacts everything, even more traditional industries. Businesses that embrace technology work smarter, faster and often at a lower cost base.

Ultimately, Desigan and Shawn believe that success often just comes down to attitude. “We have one entrepreneur in our programme who applied twice,” says Shawn. “When he was rejected, he listened to the feedback we gave him and instead of thinking we were wrong, went away, made changes and came back. He was willing to learn and open himself up to different ways of approaching things. That business has grown from R300 000 per annum to R20 million since joining us.

“Too many business owners aren’t willing to evaluate and adjust how they do things. It’s those who want to learn and embrace change and growth that excel.”

Networking, collaborating and mentoring

Property Point holds regular networking sessions called Entrepreneurship To The Point. They are open to the public and have two core aims. First, to provide entrepreneurs access to top speakers and entrepreneurs, and second, to give like-minded business owners an opportunity to network and possibly even collaborate.

“We believe in the power of collaboration and networking,” says Desigan.

“Most of our alumni become mentors themselves to new entrants to the programme. They want to share what they have learnt with other entrepreneurs, but they also know that they can learn from newer and younger entrepreneurs. The business landscape is always changing. Insights can come from anywhere and everywhere.”

The To The Point sessions are designed to help business owners widen their network, whether they are Property Point entrepreneurs or not.

To find out more, visit www.ettp.co.za

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Entrepreneur Profiles

Bain & Company Give You The Data On How To Become 40% More Productive

Top performing organisations get more done by 10am on a Thursday than most companies achieve in a full week. They don’t have more talented employees than everyone else though — they’re working with the same people and tools as you. Michael Mankins unpacks what separates these businesses from everyone else, and how you can learn to be more like them.

Nadine Todd

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Vital Stats

“Engaged employees are 45% more productive than satisfied employees. An inspired employee is 55% more productive than an engaged employee and 125% more productive than a satisfied employee.”

When Bain & Company partner, Michael Mankins evaluates businesses, he clearly distinguishes between efficiency and productivity. Efficiency is producing the same amount with less — in other words, finding and eliminating wastages. Productivity, on the other hand, is producing more with the same, which requires an increased output per unit of input and removing obstacles to productivity.

Interestingly, when businesses face challenges or tough operating conditions, the first response is always to become more efficient, instead of more productive. Restructuring and ‘rightsizing’ are the result. The problem, says Michael, is that when companies take people out, they don’t take the work out, and so the people end up coming back, along with the costs.

A better response, he says, is to identify the work that could be removed to free up time, which could then be invested in producing higher levels of output.

While businesses have become very good at tracking the productivity levels of blue-collar and manufacturing workers, tracking the productivity of knowledge workers is entirely different.

“There’s no data around white-collar productivity,” says Michael. “The problem is that the world is shifting towards knowledge work, and so, if we can’t measure productivity, output and obstacles in that space, businesses will never get the great levels of performance they’re looking for.”

Because of a complete lack of statistics in this area, when Michael and his colleague, Eric Garton, were approached by Harvard Business Review Press to write a book dealing with this issue, they had to devise a way of looking at the relative productivity of organisations comprised of white-collar workers.

The results were unexpected. “We were asked to research the difference between top performing organisations (the top quartile) compared to average organisations. I honestly thought the answers would be obvious, even if we didn’t yet have the tools to track them. I thought the best companies would have the best people. That’s 90% of the answer. Simple as that.”

As it turned out, it wasn’t that simple at all. Of the 308 organisations in the study, drawn from a global pool, the average star performer or A-player was one in seven employees. This statistic held true whether the company was in the top 25% of performers or an average performer. The difference was that the top performing businesses were 40% more productive than their counterparts — and yet their mix of talent, on average, was the same.

“There were some exceptions, but on the whole, the best in our research accomplishes as much by 10am on a Thursday as the rest do the whole week. And they continue to innovate, serve customers and execute on great ideas — all with the same percentage of A-players as other, more mediocre businesses.”

Related: (Slideshow) Top Advice From Local Entrepreneurs That Will Change Your Business In 2019

So, what were the differentiating factors?

What’s dragging your organisation down?

First, we need to understand how Michael and Eric approached their research before we can understand — and implement — their conclusions.

“We began with the notion that every company starts with the ability to produce 100 if they have a workforce that’s comprised of average talent, that’s reasonably satisfied with their job and can dedicate 100% of their time to productivity — bearing in mind that no-one can dedicate 100% of their time to productive tasks.

“The question we were focusing on was around bureaucratic procedures, complex processes and anything else that wastes time and gets in the way of people getting things done, but doesn’t lead to higher quality output or better service to customers. That’s what we call organisational drag. You start at 100 and then the organisation drags you down. The good news is that you can make up for organisational drag in three ways: First, you can make better use of everyone’s time. Second, you can manage your talent better by deploying it in smarter ways, which includes placing it in the right roles, teaming it more effectively and leading it more effectively. Third, you can unleash the discretionary energy of your workforce by engaging them more effectively.”

This trifecta — time, talent and energy — became the basis for Michael and Eric’s book, Time, Talent, Energy: Overcome Organizational Drag & Unleash Your Team’s Productive Power. “The way you manage the scarce resource of talent can make up for some, potentially even all, of what you lose to organisational drag,” says Michael.

What the research revealed: Time

time-management-productivity

“Wasted time is not an individual problem,” says Michael. “It’s an organisational problem. The symptoms include excess emails and meetings and far more reports being generated than the business needs to operate.”

These are all manifestations of an underlying pathology of organisational complexity, which is managed by senior leadership. “The best companies lose about 13% of their productive activity to organisational drag. The rest lose 25%. The most important thing is to reduce the number of unnecessary interactions that workers are having. That means meetings and ecommunications need to be relooked.”

The easiest manifestation for Michael and Eric to observe were hours committed to meetings and how much time workers spend dealing with ecommunications. What’s left-over is the time people can actually get some work done.

What they found is that the average mid-level manager works 46 hours a week. 23 hours are dedicated to meetings and another ten hours to ecommunication. That leaves 13 hours to get some work done — except that it doesn’t.

“It’s difficult to do deep work in periods of time less than 20 minutes. When we subtracted all the other distractions that happen daily, we were left with just six and a half hours each week to do work.” What’s even scarier about this statistic is the fact that meeting work and ecommunication time is increasing by 7% to 8% each year and doubles every nine years. If left unchecked, no-one will have the time to get any work done. “This is why everyone plays catch-up after hours and on weekends,” says Michael.

“One of my clients told me that his most productive meeting is at 6.30am on a Saturday, because it doesn’t involve one minute that isn’t required or one individual that doesn’t absolutely need to be there. If the same meeting was held at 2pm on a Tuesday, there’d be twice as many people, it would be twice as long and there’d probably be biscuits.”

The point is clear: We don’t treat time as the precious resource that it is, and if we did, we would radically shift our behaviour.

Start by asking what work needs to be done and then figure out the best structure to do that work. “Don’t confuse having a lean structure that does the wrong work with being effective,” says Michael. “One of the biggest problems we see is that companies are not particularly good at stopping things. Things get added incrementally, but nothing ever gets taken away. For example, we found that 62% of the reports generated by one of our clients had a producer — but no consumer. Time, attention and energy was invested in reports that no one needed and no one read.

“Ask yourself: How many initiatives have you shut down? If you made the decision that you could only do ten initiatives effectively, and each time you added an initiative, one had to be eliminated, what would your organisation look like?

“Unless you routinely clean your house, it gets cluttered. The same is true of companies. Initiatives spawn meetings, ecommunications and reports, which all lead to organisational drag.”

What the research revealed: Talent

According to Michael, the biggest element in their research that explained the 40% differential in productivity is the way that top performing organisations manage talent.

“We conducted research in 2017 that revealed the productivity difference between the best workers and average employees. Everyone knows that A-level talent can make a big difference to an organisation’s performance, but not everyone knows just how big that difference is.”

To put it in context, the top developer at Apple writes nine times more usable code than the average software developer in Silicon Valley. The best blackjack dealer at Caesars Palace in Las Vegas keeps his table playing at least five times as long as the average dealer on the Strip. The best sales associate at Nordstrom sells at least eight times as much as the average sales associate walking the floor at other department stores. The best transplant surgeon at Cleveland Clinic has a patient survival rate at least six times longer than that of the average transplant surgeon. And the best fish butcher at Le Bernadin restaurant in New York can portion as much fish in an hour as the average prep cook can manage in three hours.

It doesn’t matter what industry you investigate, A-level talent is exponentially more productive than everyone else.

This is why Michael thought that the obvious answer to why some organisations perform better than others is the mix of talented employees they’ve attracted.

“When we asked senior leaders to estimate the percentage of their workforce that they would classify as top performers or A-level talent, the average response was slightly less than 15%. And that’s despite the fact that most companies have spent vast sums of money in the so-called war for talent.”

The big difference, as Michael and Eric discovered, is how that talent is deployed. “It’s what they do with that one in seven employees that makes the biggest difference,” says Michael. “Most companies use a model called unintentional egalitarianism, which basically means that they spread star talent across all roles. The best on the other hand, are more likely to deploy intentional non-egalitarianism. They ensure that business-critical roles are held by A-level talent.”

The challenge is that approximately 5% of the roles in most companies explain 95% of a company’s ability to execute its strategy, and very few organisations articulate which roles those are — but the ones that do tend to be top performers.

“There’s an excellent historical example of this at work,” says Michael. “Between 1988 and 1994, Gap was a high-flyer in the retail sector. They performed globally on all levels — they grew faster than anyone else, were more profitable, had higher shareholder returns, and were the most admired company.

“During that time period, the organisation was led by Mickey Drexler, and his strategy was to focus on what he believed was Gap’s critical role, which was merchandising. He wanted every merchandiser to be a star. ‘No one will tell us what the colour is this year — we’re going to tell the world. We’re going to determine which styles are in and what everyone will be wearing.’

“And they did. If you want proof that Gap’s merchandisers were in fact stars during that period, you can look at today’s CEOs and COOs of the world’s largest retailers. Most of them were merchandisers at Gap during those years.”

The challenge of course is that everyone is always trying to hire stars, and yet only 15% of employees can be described as A-level talent. What can organisations do to utilise their stars wisely?

“First, move a star into a different position if they’re not in a business-critical role. To achieve this, how you define a star might have to change. Some companies hire for positions, and others hire for skills across positions. Stars, in my view, are more the latter. They can learn different skills and fill different roles.

“Second, start defining your business-critical roles. If you ask executives what percentage of their roles are business critical, most say 54%. They’re not discerning. It’s unintentional, because they don’t want to signal to their workers who aren’t in a business-critical role that they’re not as valuable to the organisation, but the reality is that people figure it out anyway, and you just end up with business-critical roles that aren’t filled by the right people, and stars in positions that anyone else could fill.”

Related: Entrepreneur Erik Kruger On The Importance Of Clarity And Embracing Failure

Teams perform better than individuals

To understand how important teams are when deploying talent, Michael uses an example from the world of racing — Nascar in the US to be precise.

“Between 2008 and 2011, there was one pit crew that outperformed everyone else on the track,” he says. “A standard pit stop is 77 manoeuvres, and this crew could complete them in 12,12 seconds, which was faster than any other team. However, if you took one team member out and substituted them with an average team member, that time jumped to 23 seconds. Substitute a second team member, and it was now 45 seconds. The lesson is simple: As the percentage of star players on a team goes up, the productivity of that team goes up — and it’s not linear.”

Michael and Eric also discovered that the role leadership plays on team productivity is both measurable and exponential.

“In 2011, the National Bureau of Economic Research wanted to quantify the impact of a great boss on team productivity. They found that a great boss can increase the productivity of an average team by 11%, which is the same as adding another member to a nine-member team.

“If you take that same boss and put them in charge of an all-star team, productivity is increased by 18%, and this is with a team whose productivity was exponentially higher to begin with. Great bosses act as a force multiplier on the force multiplier of all-star teams.”

According to Michael and Eric’s research however, what most organisations tend to do is place a great boss with an under-performing team in the hopes of improving them, when what they should be doing is pairing great bosses with great teams.

“We did a survey that asked a simple question: When your company has a mission-critical initiative, how do you assemble the team? A: Based on whomever is available. B: Based on perceived subject matter expertise. C: We attempt to create balanced teams of A, B and C players to foster the development of the team. D: We create all-star teams and we put our best leaders in charge of them.

“We thought everyone would answer D. We were wrong. 30% of our bottom three quartiles answered B, closely followed by C, and then A. Only 8% of them answered D.

“The results were very different in our top-performing quartile though. There, 81% of respondents answered D. In other words, the 25% most productive companies in our study set were ten times more likely to assemble all-star teams with their best players than the remaining 75% of the organisations in our research.”

How talent is deployed makes a difference. “I recently had this highlighted for me through another sporting analogy. The world record for the 400-metre relay is faster than the 100-metre dash multiplied four times. How is that possible? When your role is clear and your position is clear, the handoff is seamless. Under these conditions, the best teams outperform a collection of the best individuals.” Michael does offer a word of advice though.

“Don’t fall into the trap of believing that if you do have the best talent, you don’t need to worry about anything else. I don’t believe that’s true. There are always higher levels of performance that can be achieved because there are always areas you can improve on.”

What the research reveals: Energy

According to Michael, employee engagement and inspiration is a hierarchy. “There are a set of qualifiers that have to be met just to feel satisfied in your job: You need to feel safe, have the resources you need, feel that you’re relatively unencumbered in getting your job done every day and that you’re rewarded fairly.

“To be engaged, these all need to meet, and more. Now you also need to feel part of a team, that you’re learning on the job, that you’re having an impact and that you have a level of autonomy.”

Inspiration takes this a step further. “Inspired employees either have a personal mission that is so aligned with the company’s mission that they’re inspired to come to work every day, or the leadership of their immediate supervisors is incredibly inspiring, or both.”

Why does this matter? Because how satisfied, engaged or inspired your employees are has a real, tangible impact on productivity. “Engaged employees are 45% more productive than satisfied employees. An inspired employee is 55% more productive than an engaged employee and 125% more productive than a satisfied employee.”

The really scary statistic is that 66% of all employees are only satisfied or even dissatisfied with their jobs, 21% are engaged, and only 13% are inspired. “These statistics are pretty constant, although top organisations can improve their engaged and inspired ratios,” says Michael. “What we found amongst those companies that did have more engaged and inspired workers was that they all tended to believe that inspiration can be taught. It’s not innate. You can become an inspirational leader with the right attitude and training.

“For example, one organisation surveys its employees every six months and specifically asks workers to rate how inspirational their leaders are. If you’re rated uninspiring by your team for the first time, you’re given training. If, six months later, you’re still rated uninspiring, you’re given access to a coach to evaluate why the tools aren’t working for you.

“By the third, two questions are asked: Should you be a leader, and should you be at the company? Many productive employees can be effective individual contributors but aren’t necessarily leaders, or aren’t happy as leaders, and would best serve the organisation in a different role. The second question is tougher, but even more important. If an inspired employee is 55% more productive than an engaged employee and 125% more than a satisfied employee, an uninspiring leader is a tax on the performance of the company, and there has to be a consequence to that. We have to constantly enrich our workforce and leaders need to be included in that.”

The problem is that very few organisations are asking how inspiring their leaders are. “If you don’t know if your employees are engaged or if your leadership is inspiring, you can’t address it,” he says. “You can take a satisfied employee and make them engaged, but you can’t inspire someone if they aren’t first engaged — that’s the hierarchy. Employee engagement is largely achieved through the way you manage teams. You have to give people the sense that they are having an impact, working within a team and learning. Get that right, and you’ll unlock a powerful level of discretionary energy that will drive productivity in your organisation.”

Related: How Yoco Successfully Secured Capital And The Importance Of A Pitch

Time, Talent, Energy: Overcome Organizational Drag and Unleash Your Team’s Productive Power, by Michael Mankins and Eric Garton, focuses on the scarcest resource companies possess — talent — and how it can be utilised to drive productivity.

Visit www.timetalentenergy.com to find out more.

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Entrepreneur Profiles

7 Foundational Values Of Brand Cartel And How They Grew an Iconic Business From The Ground Up

Marco Ferreira, Renate Albrecht and Dillon Warren built Brand Cartel, a through-the-line agency, that delivers exactly what they wanted — and has grown exponentially as a result.

Nadine Todd

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brand-cartel

Vital Stats

  • Players: Marco Ferreira, Renate Albrecht and Dillon Warren
  • Company: Brand Cartel
  • Launched: 2013
  • Visit: brandcartel.co.za

“We’d never worked at agencies, which meant we had no idea how much you need to run an agency. We grew into it. It’s made us really good at what we do.”

When Dillon Warren, Renate Albrecht and Marco Ferreira launched Brand Cartel in 2013 they were in their early 20s with zero agency experience between them. The idea had started when Marco recognised that social media was taking off, but no agencies were playing in that space yet. It was a clear opportunity.

Printing flyers that said ‘Your social media is so last season’, Marco and Renate went from store to store in Sandton City, pitching their services. When Dillon joined them a few months later because they needed someone to handle the company’s finances, they had two laptops between them, R6 000, which Dillon had earned from a Ricoffy advert, and sheer will and tenacity.

“We shared a house to save on rent and split everything three ways,” says Renate. “At one point we hadn’t eaten in two days. My mom lent me R500 so I could buy Futurelife and a bag of apples for the three of us.”

The trio hired their first employee soon after launching Brand Cartel, and after prioritising salaries and bills, there wasn’t much leftover. “Dillon actually paid us R67 each one month,” laughs Marco. “That’s what was left — although I still can’t believe he actually sent it to us.” It was at this point that the young business owners realised they needed credit cards if they were going to make it through their start-up phase — not an easy feat when your bank balance is under R100.

Related: What Comfort Zones? Get Comfortable With Being Uncomfortable Says Co-Founder Of Curlec: Zac Liew

“Looking back, those days really taught us the value of money,” says Dillon

We spent a lot of time with very little, and we’re still careful with money today.” Through it all though, the partners kept their focus on building their business. “It almost didn’t work for a long time. We were young and naïve, but in a way, that was our strength. We didn’t have any responsibilities, and we’d never worked at agencies, which meant we had no idea how much you need to run an agency. We grew into it. It’s made us really good at what we do. All of our business has been referral business. It takes time, but we focused on being the best we could be and giving everything we had to our clients. Our differentiator was that we really cared, and were willing to offer any solutions as long as they aligned with our values.”

This is how Brand Cartel has grown from a social media agency into PR and Media Buying, SEO and PPC Strategy, Digital and Print Design, Web Development, Campaign Strategy and now an Influencer division. “It’s an incredibly competitive space with low barriers to entry, which meant it was easy to launch, but tougher to build a client base,” says Renate. “I’d sometimes cry in my car between sales pitches, and then walk in smiling. We had no idea if we’d make it.”

The perseverance has paid off though. Strong foundations have laid the groundwork for exponential growth over the past year, with turnover growing almost ten-fold in 2017 thanks to relationship-building, strong referrals and fostering an internal culture and set of values that has driven the business to new heights as a team.

Like many start-ups, Renate, Dillon and Marco have made their fair share of hiring mistakes, but as the business grew and matured, the young entrepreneurs began to realise that the success of their business lay in the quality of their team and the values they stood for.

This meant two things: Those values needed to be formalised so that they could permeate everything Brand Cartel does, and they needed a team that lived, breathed and believed in them.

“We’ve had some nasty experiences,” admits Dillon. “You should always hire slowly and fire fast, and for five years we did the opposite. We’ve hired incredible people, but we’ve also ended up with individuals who didn’t align with our values at all, and that can destroy your culture.

Dillon, Marco and Renate realised they needed to put their values on paper. “We did an exercise and actually plotted people based on a score grading them against our values, so we knew where our issues were. We knew what we wanted to stand for, and who was aligned with those values. We were right; within a few weeks resignations came in and we mutually parted ways.”

The team that stayed was different. They embraced Brand Cartel’s values, and more importantly, it gave the partners a hiring blueprint going forward.

“Values are intangibles that you somehow need to make real, so it’s important to think about the language you use, and how they can be used in a real-world work context,” says Marco.

The team has done this in a number of ways. First, they chose ‘value phrases’ that can be used in conversation, for example, ‘check it, don’t wreck it’, and ‘are you wagging your tail?’ Team members can gently remind each other of the value system and focus everyone on a task at hand simply by referring to the company’s values. “In addition, when someone is not behaving according to those values, you can call them out on the value, which is an external thing, rather than calling them out personally,” explains Dillon.

Related: How Matthew Piper And Karidas Tshintsholo Launched Their First Business From Their UCT Dorm Rooms

Second, all performance reviews are based on the values first. This means everyone in the organisation begins any interaction from a place of trust, knowing they are operating according to the same value system.

“When you’re in a production environment with jobs moving through a pipeline, there can be problems and delays,” explains Marco. “Instead of pointing fingers when something is over deadline or a mistake is made, our team can give each other the benefit of the doubt and work together. They trust each other, which creates cohesion. We all work as a team, which impacts the quality of our work and the service we offer our clients.”

The system is simple. Coaches will step in first if there is an issue before it escalates to the Head of Team Experience, Nicole Lambrou. If Nicole is called in, she will address the problem head on. “Inevitably it’s something fixable,” says Marco. “By addressing it immediately and in the context of our values it can be sorted out quickly. Ultimately, the overall quality of our team improves, and we are a more cohesive unit.”

The founders have seen this in action. “I recently arrived at a client event and three different people came up to me and complimented my team on the same things — all of which aligned with our values. Everyone at Brand Cartel lives them, internally and externally,” says Renate.

The value system has also shaped how the team hires new employees. “We used to meet people and hire for the position if they could do the job,” says Renate. “But then we started realising that anyone can hold up for an hour or two in an interview. You only learn who they really are three months and one day later.

“We need people who walk the talk, and we really only had a proper measurement of that once we articulated our values. Our interview style has changed, but so has what we look for.”

brand-cartel-south-african-agency

Here are the seven values that Dillon, Marco and Renate developed based on what they want their business to look like, how they want it to operate, and what they want to achieve, both internally, and in the market place.

1. Play with your work

Our goal is for everyone on our team to become so good at what they do that it’s no longer work. Once that happens you love your job because you’re killing it. It’s why sportsmen are called players, not workers, and it starts with the right mindset.

2. Wag your tail

The idea behind this value stems from Dale Carnegie, who said ‘have you ever met a Labrador you don’t like?’ In other words, we all respond well to people who are friendly. It needs to be genuine though, so again, it’s a mindset that you need to embrace.

We live these values whether we’re at the office or meeting clients. If you go into each and every situation with joy and excitement, from meeting someone new to a new brief coming in, you’ll be motivated and excited — and so will everyone around you.

3. Check it, don’t wreck it

The little things can make big differences. Previously it was too easy to pass the buck, which meant mistakes could — and did — happen. Once you instil a sense of ownership and create a space where people are comfortable admitting to a mistake however, two things happen. First, things get checked and caught before there’s a problem. Second, people will own up if something goes wrong. This can help avoid disasters, but it also leads to learnings, and the same thing not happening again.

4. What’s Plan B (aka make it happen)

We don’t want to hear about the problem; come to us with solutions, or better yet, already have solved the problem and made it happen. We reached a point where we had too many people coming to us with every small problem they encountered, or telling us that something wasn’t working so they just didn’t do it.

That wasn’t the way we operated, and it definitely wasn’t the way we wanted our company to operate. We also didn’t want to be spoon feeding our team. It’s normal for things to go wrong and problems to creep in — success lies in how those problems are handled.

Ignoring problems doesn’t make them go away, so we embrace them instead, encouraging everyone on our team to continuously look for solutions. For example, the PR department holds a ‘keep the paw-paw at Fruit & Veg City’ meeting every morning, where we deliberately look for where problems might arise so that we can handle them before they do. We start with what’s going wrong and then move to what’s going right. You need to give your team a safe and transparent space to air problems though. We don’t escalate. We need to know issues so that we can collectively fix them, not to find fault.

Related: The 5-Hour Rule Used By Bill Gates, Jack Ma And Elon Musk

5. Put your name to it

It’s about pride in work and making it your own. When someone has pride in what they’re doing, they’ll not only put in extra time and effort, but they’ll pull out all the stops to make their creative pop, or go the extra mile for a client.

We need to find the balance between great quality work and fast output though. One way we’ve achieved this is by everyone reviewing the client brief and then committing to how long their portion will take.

When someone gives an upfront commitment, they immediately take ownership of the job. It took time for us to find our groove with this, but today we can really see the difference. Our creative coaches also keep a close eye on time sheets and where everyone is in relation to the job as a whole to keep the entire brief on track. If someone is heading towards overtime we can immediately ask if something is wrong and if they need assistance.

We also celebrate everything that leaves our studio. Every morning we have a mandatory 15-minute catch up session where we check in on four core things: How am I feeling (which allows us to pick up on the mood in the room and the pressure levels of our teams); What’s the most important thing I did yesterday; What’s the most important thing I’m going to do today (both of which give intention and accountability); and ‘stucks’, issues that team members need help with. We then end off with our achievements so that we can celebrate them together.

6. Keep it real (aka check your ego at the door)

We believe in transparency. At the end of the day we’re all people trying to achieve the same thing, but it’s easy for ego to creep in — especially when things go wrong. You can’t be ego-driven and solutions-orientated. If clients or team members are having a bad day, you need to be able to focus on the solution. Take ego away and you can do just that. It’s how we deal with stucks as well. We can call each other out and say, ‘I’m waiting for you and can’t do my job until I receive what you owe me,’ and instead of getting a negative, ego-driven reaction, a colleague will say, ‘sorry, I’m on it.’

7. Walk the talk

For us, ‘walk the talk’ really pulls all our other values together. It’s about being realistic and communicating with each other. If you’ve made a mistake or run into a problem, tell your client. Don’t go silent while you try and fix it. Let them know what’s happening and fill them in on your plan of action.

Walk the talk also deals with the industry you’re in. For example, if you’re a publicist, you need to dress like a publicist, talk like a publicist, and live your craft. In everything we do, we keep this top of mind.

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